The dollar jumped to its highest level in 20 years against a host of other major currencies on Wednesday, after Russian President Vladimir Putin announced a “partial mobilization” to fight in Ukraine, stressing his country is ready to use “all his defensive means” to protect himself
While the dollar benefits from bets on tight monetary policy ahead of the US Federal Reserve meeting later on Wednesday, the dollar index, which is benchmarked against other currencies such as the Japanese yen, euro and the British pound, rose 110.87 points. a record increase since 2002.
Putin said “the goal of the West is to weaken us, divide our ranks, destroy Russia” and resort to “nuclear blackmail” against it, hinting that it is ready to use nuclear weapons.
“Fears of a possible escalation of the war in Ukraine, with hundreds of thousands of Russians mobilizing in reserve, are driving investors into (considered) safe-haven currencies,” said Susanna Streeter, an analyst at Hargreaves Lansdown Financial Services.
And at 08:35 GMT, the greenback was up 0.71% to 0.9901 against the euro and 0.38% to 1.1337 against the pound sterling. The Japanese yen alone rose 0.05% to 143.81 against the dollar, while the value of gold rose 0.41% and the price of the precious metal reached 1,671.70 dollars per ounce.
Investors’ eyes are on the meeting of the US Central Bank, which will publish its decision after the end of the trading sessions in Europe.
The Federal Reserve is struggling to rein in inflation and is careful not to show even the slightest sign of a slowdown in rate hikes.
Analyst Han Tan of Exinity Group expects to “raise interest rates to their highest levels since 2008.”
Among the currencies facing difficulties, the British pound, which reached its earliest value in today’s trading session, its lowest level since 1985 at $1.1305, on the gloomy outlook for the British economy.
On Thursday, the Bank of England will publish its monetary policy decision, and it is expected to continue raising interest rates to curb inflation.